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Cash vs annuity, another factor to consider?

Topic closed. 35 replies. Last post 4 years ago by mightwin.

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Coin Toss's avatar - shape barbed.jpg
Zeta Reticuli Star System
United States
Member #30470
January 17, 2006
10344 Posts
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Posted: February 8, 2013, 5:32 pm - IP Logged

Looking at USA MEGA jackpot analysis for Powerball at $40 for Pennsylvania (just an arbitrafry pick) I'm wondering if the new tax rates and the current regime going after those who make so much a year wiuld be another reason ro opt for cash, a one time payout.

Let's consider:

Pennsylvania: No State Tax on Lottery Prizes!
Your average net per year: $1,000,000Your net payout: $18,825,000
After 30 payments: $30,000,000
Annuity Payment Schedule

 So for those 30 years you would be getting approximately $1M a year would you be getting clobbered tax wise as opposed to someone who took one cash payout?

Of course the present ruling class regime won't be there forever but like they say there's no such thing as a temporary tax.

So would the choice of an annuity put you in a "hand most of it over to us" federal tax situation for the length of the annuity?

Maybe I'm way off here but just curious.

What do you say, folks?

Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

Lep

There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.


    United States
    Member #130815
    July 25, 2012
    1636 Posts
    Offline
    Posted: February 8, 2013, 6:47 pm - IP Logged

    Looking at USA MEGA jackpot analysis for Powerball at $40 for Pennsylvania (just an arbitrafry pick) I'm wondering if the new tax rates and the current regime going after those who make so much a year wiuld be another reason ro opt for cash, a one time payout.

    Let's consider:

    Pennsylvania: No State Tax on Lottery Prizes!
    Your average net per year: $1,000,000Your net payout: $18,825,000
    After 30 payments: $30,000,000
    Annuity Payment Schedule

     So for those 30 years you would be getting approximately $1M a year would you be getting clobbered tax wise as opposed to someone who took one cash payout?

    Of course the present ruling class regime won't be there forever but like they say there's no such thing as a temporary tax.

    So would the choice of an annuity put you in a "hand most of it over to us" federal tax situation for the length of the annuity?

    Maybe I'm way off here but just curious.

    What do you say, folks?

    Since nobody here is "rolling in it" persay....I don't see a downside to either choice...I mean on one hand your a millionaire and growing...on the other your a multi millionaire up front...Since Ive never been either I can't say but it would be a problem Id love to have in the very near future..

      Avatar
      Milwaukee, WI
      United States
      Member #3131
      December 27, 2003
      665 Posts
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      Posted: February 8, 2013, 8:50 pm - IP Logged

      Geeze I would get my last check when I'm 92.........

      Will the USA last 30 more years?

      Convert it to gold?

      I would be linked to the state of Wis for another 30 years...

      Australia here I come!

        sully16's avatar - sharan
        Ringleader
        Michigan
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        October 28, 2009
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        Posted: February 8, 2013, 9:12 pm - IP Logged

        The way they change the tax codes every year, I think at this point I would take all the cash at once.

        Did you exchange a walk on part in the war ?

        For a lead role in a cage?

         

                                                    From Pink Floyd's " Wish you were here"

          dallascowboyfan's avatar - tiana the-princess-and-the-frog.jpg
          Oklahoma
          United States
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          November 12, 2009
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          Posted: February 8, 2013, 9:40 pm - IP Logged

          Oklahoma lottery tax is 4% so I will be taking the cash option.

          I Love Pink & Green 1908

            helpmewin's avatar - dandy
            u$a
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            February 22, 2011
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            Posted: February 8, 2013, 9:43 pm - IP Logged

            Oklahoma lottery tax is 4% so I will be taking the cash option.

            I Agree!

            Let it Snow Snowman

              sully16's avatar - sharan
              Ringleader
              Michigan
              United States
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              October 28, 2009
              40250 Posts
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              Posted: February 8, 2013, 9:51 pm - IP Logged

              Oklahoma lottery tax is 4% so I will be taking the cash option.

              Michigan is 6%, on everything except food.

              Did you exchange a walk on part in the war ?

              For a lead role in a cage?

               

                                                          From Pink Floyd's " Wish you were here"

                rdgrnr's avatar - walt
                Way back up in them dadgum hills, son!
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                Posted: February 8, 2013, 10:01 pm - IP Logged

                There's no tax in TN but I'd wanna get it all now and use some of it before it's not worth anything anymore.

                I see Virginia is looking into printing their own money now, who knows how long the dollar will be worth anything?

                  PlayToWin47's avatar - Lottery-041.jpg
                  Joplin MO
                  United States
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                  January 28, 2013
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                  Posted: February 8, 2013, 11:05 pm - IP Logged

                  There's no tax in TN but I'd wanna get it all now and use some of it before it's not worth anything anymore.

                  I see Virginia is looking into printing their own money now, who knows how long the dollar will be worth anything?

                  That is definitely something to consider.

                  Even if the dollar doesn't completely lose it's value and die... if you take the annuity, you're always gambling on what the tax code changes will be from year-to-year.  Right now, taxes are better than they used to be in the not too distant past ... but ... with all of the recent out-of-control government spending and the country's current deficit, I can't imagine tax rates getting any better from here out.

                  Even if you do take the cash on a huge amount, you'll still have to deal with tax code changes on your jackpot's interest.

                    savagegoose's avatar - ProfilePho
                    adelaide sa
                    Australia
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                    April 11, 2006
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                    Posted: February 8, 2013, 11:46 pm - IP Logged

                    http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Income_tax_rates_in_history has this chart. as you can see the top rates and when u start paying therm  varied   widely over the years.  The best part of taking cash is determining  what risk and rate of interest you will get for yourself.

                    History of income tax rates adjusted for inflation (1913-2010)[43]
                    Number ofFirst BracketTop Bracket
                    YearBracketsRateRateIncomeAdj. 2011Comment
                    191371%7%$500,000$11.3MFirst permanent income tax
                    1917212%67%$2,000,000$35MWorld War I financing
                    1925231.5%25%$100,000$1.28MPost war reductions
                    1932554%63%$1,000,000$16.4MDepression era
                    1936314%79%$5,000,000$80.7M
                    19413210%81%$5,000,000$76.3MWorld War II
                    19422419%88%$200,000$2.75MRevenue Act of 1942
                    19442423%94%$200,000$2.54MIndividual Income Tax Act of 1944
                    19462420%91%$200,000$2.30M
                    19642616%77%$400,000$2.85MTax reduction during Vietnam war
                    19652514%70%$200,000$1.42M
                    19811614%70%$212,000$532kReagan era tax cuts
                    19821412%50%$106,000$199kReagan era tax cuts
                    1987511%38.5%$90,000$178kReagan era tax cuts
                    1988215%28%$29,750$56kReagan era tax cuts
                    1991315%31%$82,150$135k
                    1993515%39.6%$250,000$388kOmnibus Budget Reconciliation Act of 1993
                    2003610%35%$311,950$380kBush tax cuts
                    2011610%35%$379,150$379k
                    2013710%39.6%$400,000$400k[disputed discuss]

                    2014 = -1016; 2015= -1409; 2016 JAN = -106; FEB= -81; MAR= -131; APR= - 87: MAY= -91; JUN= -39; JUL=-134; AUG= -124; SEP = -123; OCT= -84  NOV=- 73 TOT= -3498

                    keno historic = -2291 ; 2015= -603; 2016= JAN=-32, FEB= +12 , MAR= -86, APR = -77. MAY= -48, JUN= -29, JUL=-71; AUG = -52; SEPT= -43; OCT = +56 NOV = -33 TOT= -3297

                      PlayToWin47's avatar - Lottery-041.jpg
                      Joplin MO
                      United States
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                      January 28, 2013
                      190 Posts
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                      Posted: February 9, 2013, 12:49 am - IP Logged

                      http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Income_tax_rates_in_history has this chart. as you can see the top rates and when u start paying therm  varied   widely over the years.  The best part of taking cash is determining  what risk and rate of interest you will get for yourself.

                      History of income tax rates adjusted for inflation (1913-2010)[43]
                      Number ofFirst BracketTop Bracket
                      YearBracketsRateRateIncomeAdj. 2011Comment
                      191371%7%$500,000$11.3MFirst permanent income tax
                      1917212%67%$2,000,000$35MWorld War I financing
                      1925231.5%25%$100,000$1.28MPost war reductions
                      1932554%63%$1,000,000$16.4MDepression era
                      1936314%79%$5,000,000$80.7M
                      19413210%81%$5,000,000$76.3MWorld War II
                      19422419%88%$200,000$2.75MRevenue Act of 1942
                      19442423%94%$200,000$2.54MIndividual Income Tax Act of 1944
                      19462420%91%$200,000$2.30M
                      19642616%77%$400,000$2.85MTax reduction during Vietnam war
                      19652514%70%$200,000$1.42M
                      19811614%70%$212,000$532kReagan era tax cuts
                      19821412%50%$106,000$199kReagan era tax cuts
                      1987511%38.5%$90,000$178kReagan era tax cuts
                      1988215%28%$29,750$56kReagan era tax cuts
                      1991315%31%$82,150$135k
                      1993515%39.6%$250,000$388kOmnibus Budget Reconciliation Act of 1993
                      2003610%35%$311,950$380kBush tax cuts
                      2011610%35%$379,150$379k
                      2013710%39.6%$400,000$400k[disputed discuss]

                      I wrote earlier...

                      Right now, taxes are better than they used to be in the not too distant past...

                      Ok ... early '80s ... a little more distant than I thought.

                        maximumfun's avatar - Lottery-030.jpg
                        Lavender Rocket

                        United States
                        Member #124616
                        March 16, 2012
                        2642 Posts
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                        Posted: February 9, 2013, 1:29 pm - IP Logged

                        Looking at USA MEGA jackpot analysis for Powerball at $40 for Pennsylvania (just an arbitrafry pick) I'm wondering if the new tax rates and the current regime going after those who make so much a year wiuld be another reason ro opt for cash, a one time payout.

                        Let's consider:

                        Pennsylvania: No State Tax on Lottery Prizes!
                        Your average net per year: $1,000,000Your net payout: $18,825,000
                        After 30 payments: $30,000,000
                        Annuity Payment Schedule

                         So for those 30 years you would be getting approximately $1M a year would you be getting clobbered tax wise as opposed to someone who took one cash payout?

                        Of course the present ruling class regime won't be there forever but like they say there's no such thing as a temporary tax.

                        So would the choice of an annuity put you in a "hand most of it over to us" federal tax situation for the length of the annuity?

                        Maybe I'm way off here but just curious.

                        What do you say, folks?

                        tax wise... its anyone's guess... this year there is the obama care tax (3.8%?) and the increase to 39.6%... but isnt the better question that of potential/expected value of the money?

                        CT's (conspiracy theorists) are glomming onto the recent events to predict everything from the fall of the US in the next 6 months to Texas executing its option from its state charter and turning itself into 5 different states to...

                        but all the predictions seem to point to one thing... do i want to trust "THEM" with my win (annuity) or do i want control in my hands...

                        LUMP SUM selection here.

                          Piaceri's avatar - sarsony1
                          Republic of Texas
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                          January 9, 2008
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                          Posted: February 9, 2013, 2:22 pm - IP Logged

                          Cash option before the 2013 tax hikes, cash option after. Not a difficult choice for me regardless of tax rates. A good tax accountant will keep your initial taxes as minimal as possible. A good investment strategy and a good tax accountant will get you the best rates possible over the years after the initial win. Just ask Mitt.

                          face

                          singlewinnersinglewinnersinglewinner   

                            mediabrat's avatar - 18z0typ
                            upstate NY
                            United States
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                            March 31, 2011
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                            Posted: February 9, 2013, 3:51 pm - IP Logged

                            Good grief, ANOTHER thread complaining about taxes?!??!  Are you people always this miserable?

                            Patriot

                              Coin Toss's avatar - shape barbed.jpg
                              Zeta Reticuli Star System
                              United States
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                              Posted: February 9, 2013, 4:04 pm - IP Logged

                              Good grief, ANOTHER thread complaining about taxes?!??!  Are you people always this miserable?

                              Miserable is your perception.

                              There's just more things to consider with the new tax rates.

                              Threads like this must make people in countries that don't tax gambling wins wonder why the U.S. does.

                              Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

                              Lep

                              There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.